Why is the supply of oil more price elastic in the long run?
A)New deposits are found.
B)Better extraction technology.
C)Ability of firms to change the amount of all inputs.
D)All of the above.

Question

Quizplus · Accepted Answer

The supply of oil is more price elastic in the long run because of a combination of factors. Firstly, new oil deposits are being discovered around the world, which provides a greater supply of oil in the market. Additionally, with advancements in technology, oil extraction has become more efficient and cost-effective, allowing producers to extract more oil at a lower cost, thus increasing supply. Finally, oil firms have the ability to adjust the levels of all inputs, such as labor and capital, in response to changes in the market price of oil, making their supply more responsive to changes in price. Together, these factors make the supply of oil more price elastic over the long run.

Why Is the Supply of Oil More Price Elastic in the Long